Auto Restructuring vs. Bank Bailouts

by Leigh Graham

Published March 31, 2009 @ 09:30AM PT

Surely by now you're aware that Obama rejected GM and Chrysler's restructuring plans, giving them a brief window to resubmit plans in order to receive more bailout funds, and requiring the resignation of GM's CEO Rick Wagoner (Emily has more on Wagoner).  In his remarks, the President said their on-going problems are not the faults of the workers, but a failure of leadership including - one of his favorite refrains - a consistent failure to make tough choices.  FDL's emptywheel, who lives in Michigan, has a great summary of what amounts to the Administration's push of GM and Chrysler towards bankruptcy.  (Though Reuters reports that emerging from corporate bankruptcy just got harder.)

The issue for me - like many liberal/progressive bloggers - is how much does this further hurt auto workers, and why isn't an equivalent tough-love restructuring happening on Wall Street?

Obama conceded that in addition to bond holders finally having to settle with GM (good), union workers will have to make more concessions (bad).   The major question here is how does this affect their healthcare coverage and pensions going forward - pensions, I'd add, already in jeopardy from reckless investment strategies on the part of the federal government.

And then there's the more incendiary double standard for the banks versus the automakers.  I was struck by economist Simon Johnson's comments on the radio yesterday, in which he described the banks as a financial oligarchy, with so much power in DC that they're somehow both "too big to fail" and "too big to be rescued."  When economists are comparing the U.S. to Argentina and Russia, you know we've got a problem.  I concur with Johnson's point that the Administration's response to the banks represents "an extraordinary failure of governance" towards a set of companies in which managerial chicanery has wiped out shareholders and left company worth 1-1.5% of what there were worth 18 months ago.

Yep.  I leave you with a long but highly recommended piece by Stirling Newberry at FDL on the "Three Faces of the Left."  Obama, Summers, et al.?

"The first of these groups is the financial left. This motto of this group is "a rising tide lifts all boats," and its intellectual roots reach back even to the era of "gold Democrats" such as Grover Cleveland. The advantages of this view point are many. First, it has a direct opposite numbers among the Republicans. It does not rock the boat in terms of the structure of elites. Finance also has an almost magical quality, in that it can heal an economy rather rapidly – as soon as the blocked arteries of lending are cleared, good times return. Robert Rubin, Larry Summers, Tim Geithner, and yes, Barack Obama are all members of this wing of the left. The idea is to produce efficiencies and distribute the benefits widely. This wing has risen to being the most important wing of the party, particularly with the rise of money in media politics. The financial wing of the party is the wing that does most of the funding of the left, with its large donors and clear understanding of benefits. Suburban voters are drawn to this wing, because it represents the office dwelling middle class. The public discourse is driven, to no small extent by those who invest their future in this system, and those who manage that money."

My emphases.  Now compare them to the "labor left" and progressives.

(Photo of GM building in Detroit by Richard E. Freeman.)